Judge Jackson's rejection of Microsoft's request to hold further hearings and his statement that he will proceed to consider behavioral remedies in the antitrust case is not surprising.

We believe that even Microsoft was not surprised by the judge's decision not to dismiss the case or, more recently, approve Microsoft's request for more arguments. As we?ve said before, we expect the judge to go through the full remedy cycle of the trial and to explore all of the various proposals, including the remedy to break up Microsoft. The judge will likely rule to break up Microsoft in some manner--today, he asked the Department of Justice to submit a revised remedy proposal to the court by Friday. After this, Microsoft will appeal.

However, what's interesting is why Microsoft asked for things that it likely knew the judge would reject. We believe this is all part of Microsoft's legal strategy to attempt to position the judge's ruling as unreasonable and to leverage that contention in its imminent appeal, arguing, in part, that it was not given ample time to respond to the government's proposal.

While this event represents another loss for Microsoft, we believe the company will maintain its strategic direction, and that it will be business as usual until an absolute final ruling is rendered. While appealing the current and future rulings, Microsoft's most significant challenge will be to motivate employees to focus on business and de-emphasize the trial as much as possible.

It is important that Microsoft stays focused on employee morale and retention, product quality, service delivery and product strategy and not let the trial events serve as a distraction. Any immediate impact on users of Microsoft products will likely be slight, if at all.